HR Director’s Alleged Comments Prove Costly

Court Reinstates Worker’s Discrimination And Retaliation Claims

A federal appellate court recently held that remarks allegedly made by a law firm’s human resources director could be “direct evidence” of pregnancy discrimination and a violation of the Family and Medical Leave Act (FMLA). According to the Seventh Circuit Court of Appeals, such evidence falls outside of the “hearsay” objection that might otherwise keep it from being presented to a jury. Makowski v. SmithAmundsen LLC, No. 10-3330, Seventh Circuit Court of Appeals (November 9, 2011).

Factual Background

Lisa Makowski was hired as a marketing director by Chicago-based law firm SmithAmundsen LLC in January 2005. She reported to Glen Amundsen, chair of the firm’s executive committee and Michael DeLargey, chief operating officer. During her employment, Makowski received annual salary increases and discretionary bonuses based on her performance.

In the summer of 2007, Makowski informed the firm’s management that she was pregnant. She requested, and was granted, leave under the FMLA. Between November 5 and November 25, Makowski worked from home with the firm’s permission, as she had been placed on bed rest by her obstetrician. She began her FMLA leave on November 26, and gave birth on December 2.

In January 2008, the firm’s Executive Committee conducted its annual retreat, at which time it assessed the overall structure of the firm to determine whether staffing changes were necessary. During the retreat, the Executive Committee decided to terminate Makowski and to move another individual into the leadership position within the marketing department. After that meeting, the Committee informed the firm’s human resources director, Molly O’Gara, that Makowski did not “fit into our culture,” and asked O’Gara to consult with outside counsel to discuss the implementation of Makowski’s termination.

On February 4, 2008, while Makowski was still on maternity leave, Amundsen and DeLargy terminated her employment over the telephone. In that conversation, Makowski was told that her position was being eliminated as part of an organizational restructuring.

Later that day, Makowski came into the office to pick up her personal belongings. According to Makowski, as she was leaving the office she was met by O’Gara, who told her that she “was let go because of the fact that [Makowski] was pregnant and . . . took medical leave.” O’Gara also allegedly stated that the same thing had happened to several other women employees in the past and that Makowski should speak to a lawyer about a possible class action lawsuit against the firm.

Makowski filed a lawsuit on December 2, 2008, alleging violations of both the Pregnancy Discrimination Act and the FMLA, and cited O’Gara’s alleged remarks as direct evidence of discrimination. The firm moved for summary judgment, which was granted based on the finding that because O’Gara had not been directly involved in the decision to terminate Makowski her statements concerning the termination were inadmissible hearsay. Without those statements, the judge held, Makowski lacked evidence of the connection between her termination and any discriminatory acts by the firm. Makowski asked the Seventh Circuit Court of Appeals to reinstate her case.

Legal Analysis

The Seventh Circuit reversed the judge’s decision. The court found that because O’Gara’s statements concerned a matter within the scope of her duties as HR director, they fell within an exception to the hearsay rule. Essentially, under that exception, an “agent” acting within the scope of his or her employment with the company speaks on behalf of the company and, therefore, his or her statement is actually a party admission that can be used to support a claimant’s case.

In this case, O’Gara’s alleged comments to Makowski fit within the scope of her duties as an HR director who was involved in the firm’s hirings and firings. Furthermore, the court pointed out that O’Gara’s discussions with outside counsel at the request of the Executive Committee could actually support an argument that O’Gara was directly involved in the final decision to fire Makowski, since the Committee waited for the counsel’s response before implementing the termination.

Assuming O’Gara’s alleged statements may be used at trial, the Seventh Circuit held, a reasonable jury could find that they provide direct evidence that pregnancy was a motivating factor in Makowski’s discharge. Likewise, the court found that O’Gara’s comments provide the “necessary causal connection” between Makowski’s protected activity (taking FMLA leave) and her termination. As a result, the Seventh Circuit reinstated Makowski’s lawsuit.

Practical Impact

According to Richard Samson, a shareholder in Ogletree Deakins’ Chicago office: “At first glance one might be tempted to conclude that this case can be narrowly viewed as a company falling victim to a `rogue’ HR director. However, the reality is quite different. The court acknowledged the key role of HR representatives in typical personnel decisions such as hiring and firing so that comments that might seem benign can still be binding on an employer. But as this case demonstrates, employers are best served presuming that even the most errant of statements from their HR department may be used against them. This case underscores the strategic need for training for managers, supervisors and HR personnel, especially with respect to having the difficult conversations needed for disciplinary and termination meetings.”

Arthur Smith, also a shareholder in the firm’s Chicago office, added: “The ruling directing that the statements made by the HR director be admitted into evidence is not an aberration; other courts facing similar circumstances have reached the same result. Although the case was remanded to the trial court, if the HR director admits to having made the critical statements the likely outcome will be a settlement to avoid trial. The importance of the use of `talking points’ for disciplinary and termination meetings cannot be overstressed. Any remarks outside of pre-established, pre-rehearsed talking points could be used – as in this case – to argue to the jury that the `official’ reason given for the adverse action was a pretext for discrimination.”